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Tuesday, 06 September 11
INDONESIAS PROPOSED COAL EXPORT BAN MAY HAVE IMPACT ON THE INDIAN POWER SECTOR - DIPESH DIPU
.jpg) COALspot.com - This is a special interview about Indonesian proposed coal export ban by 2014, with Mr. Dipesh Dipu, Director of Deloitte Touche Tohmatsu, India.
The Indonesian government is currently in the process of drafting a new regulation that could ban the export of low-grade coal by January 12, 2014. This is likely to apply to coal below 5700 kcal/kg on air dried basis in value.
As of now Indonesia is producing around 150 million tons of coal with calorific value below 5700 GAD (according to chairman of Indonesian coal mining association). However by 2014, there are possibilities the total production of below 5700 GAD coal may reach more than 200 million per annum.
Will Indonesian coal export ban impact on the Indian fuel requirements?
The earlier grade of coal that was being considered for proposed ban has GCV of 5100 kcal/kg of less (adb), which can be comparable to 3800-4200 kcal/kg (arb) domestic coal available in India. This grade of coal has found favor in India primarily due to likely price advantage but economics of power generation based on such grade of imported coal may be a suspect. This considering that such grades of coal from Indonesia typically have high moisture content, which makes transportation cost per unit of energy generated higher. The quantum of the low grade of coal (<5100 kcal/kg adb) procured from Indonesia is likely to remain relatively low.
However, if the new definition of low grade coal is applied (<5700 kcal/kg adb), it may be reasonable to believe that such a ban may have impact on the Indian power sector as volumes in this grade of coal are expected to rise in the proportion of coal exports to India. Several of the acquisitions made by Indian power generation companies in Indonesia have been in coal blocks that will produce coal of this grade, and a blanket ban on the exports can jeopardize power plant development in India.
On the other hand, the domestic Indonesian market may not be prepared to consume all the coal mined of this grade in view of the power generation capacity addition plans in Indonesia. In such a case, the coal mine development is likely to be deferred. The Indonesian law makers may need to reconsider domestic market demand, investment climate in coal sector and impact of the legislation on the export revenues.
What is the alternative source for Indian power industry if the proposed coal export ban come into effect by 2014?
Indian power generation companies have been forced to look out for coal assets abroad due to the investment and regulatory environment within the country. India boasts of more than 110 billion tonnes of coal reserves, which largely fall within a 300 meters of depth. If the regulatory and investment environment is amended to allow greater participation of private sector Indian dependence on imports will be reduced.
However, for imports, India will continue to look at Indonesia, South Africa, Australia and newer destinations like Mozambique and Columbia. But these sources also have constraints, domestic demands in South Africa is likely to restrict quantum jump in exports out of South Africa. Indonesia has also proposed domestic market obligations. Mozambique may have infrastructure constraints for large volumes of coal being transported from Tete province to ports of Maputo, Ncala or Beira. Australian coal is of high quality but may have higher costs of mining and transport.
What would be the additional cost if Indian consumers switch their sourcing origin from Indonesia?
Indonesia has competitive advantage due to its geographical closeness. However, on a per tonne basis, assuming comparable quality, costs of transport may make marginal difference when compared with South Africa and Mozambique.
When compared to Australian coal, due to the high quality, cost of energy may well be comparable even though shipping costs are higher. Between Indonesian coal (5500 kcal/kg adb priced at USD 90 per tonne) and Australian coal (6500 kcal/kg adb priced at USD 120 per tonne), indicative variable cost difference of power generation may be about Indian Rupees 0.20 to 0.30 per kWh (electricity unit) in favor of Indonesian coal.
Will it affect Indian economy growth or this coal export ban is ignorable as India can easily identify alternative sources of fuel?
The magnitude of growth in power generation in India will necessarily mean that coal will remain the mainstay. Natural gas has had issues of availability. Nuclear plant development is facing socio-political challenge in view of the risks of technology failure. Development of hydel power has also faced issues of land acquisition, rehabilitation & resettlement apart from the technical issues of hydro-geological features. Renewable sources such as solar and wind generation are still projected to constitute a small portion of India power generation mix. Identifying an alternative source that can match coal in its accessibility, availability and affordability in the context of scale of capacity addition required in India is a challenge.
What is the Indian government's role on this issue, whether government has to come out with the solution such as easing Indian mining and environment law, open up mining for foreigners, G2G arrangement, etc…?
There is a need to look at domestic sources with pro-active and constructive approach and make all necessary legal and statutory amendments that make the resources available and mineable. Easing the regulations may not be one of such measures but making those regulations work in sync with each other in a time bound and predictable manner must certainly be.
There is certainly a case for opening the domestic coal sector for private participation, including independent miners, and for foreign participation so that newer technology and enhanced scale of operations are implemented in India. The regulation also needs to permit risk capital to come in for prospecting and exploration.
For imports the G2G relations can be leveraged to secure coal assets. India has good relationship with Indonesia and has also signed a tax treaty with Mozambique in 2010 which will facilitate investments. Government may also engage with these countries to ease exports to India and extend fiscal support to coal mining companies investing in mining and associated infrastructure development.
About Dipesh Dipu
Dipesh Dipu works as Director with Deloitte Touche Tohmatsu India Pvt. Ltd in the Energy and Resources consulting practice of the firm and anchors the Firm’s initiative in the mining and metals sectors.
He is a mining engineering graduate from Indian School of Mines and is a Chartered Financial Analyst (CFA). He has also done executive program in business management from Indian Institute of Management Calcutta. Dipesh has recently been awarded the Abheraj Baldota Gold Medal for the Young Mining Engineer of the Year 2007 by the Mining Engineers’ Association of India in recognition of his contributions in the improvement of mining industry in India.
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Wednesday, 20 May 15
TANKER MARKET INSIGHT - JOHN N. COTZIAS
Since Early October 2014 the tanker market has been experiencing a very positive momentum and has continued its strong performance so far in 2015. ...
Wednesday, 20 May 15
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COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q3' 2015 increased month over month and week over week.
The Q3 swap has increas ...
Wednesday, 20 May 15
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Wednesday, 20 May 15
IRON ORE PRICES TO REMAIN WEAK ON LOW DEMAND, HIGH OUTPUT - FITCH
Iron ore prices will stay low for several years due to increasing supply, weak demand growth in China and the slower-than-expected closure of high- ...
Tuesday, 19 May 15
KOMIPO IS SEEKING TOTAL 2.34 MMT OF HCV AND LCV COAL FOR 2015 - 2017
COALspot.com: South Korean state-owned utility Korea Midland Power (KOMIPO) issued an new tender to buy total 2.34 million Metric Tons (MT) of HCV ...
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- Kobexindo Tractors - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Jindal Steel & Power Ltd - India
- Jaiprakash Power Ventures ltd
- Rashtriya Ispat Nigam Limited - India
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- Bhushan Steel Limited - India
- Rio Tinto Coal - Australia
- Directorate Of Revenue Intelligence - India
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- Coal and Oil Company - UAE
- Trasteel International SA, Italy
- Australian Coal Association
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- Ministry of Transport, Egypt
- Indogreen Group - Indonesia
- Semirara Mining Corp, Philippines
- MS Steel International - UAE
- Chamber of Mines of South Africa
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- Wood Mackenzie - Singapore
- Riau Bara Harum - Indonesia
- Commonwealth Bank - Australia
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- Mjunction Services Limited - India
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- Australian Commodity Traders Exchange
- Orica Australia Pty. Ltd.
- CNBM International Corporation - China
- Bangladesh Power Developement Board
- Medco Energi Mining Internasional
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- Grasim Industreis Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- VISA Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Vedanta Resources Plc - India
- Planning Commission, India
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- Ambuja Cements Ltd - India
- Dalmia Cement Bharat India
- Edison Trading Spa - Italy
- LBH Netherlands Bv - Netherlands
- Central Java Power - Indonesia
- Price Waterhouse Coopers - Russia
- Simpson Spence & Young - Indonesia
- SMC Global Power, Philippines
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- Holcim Trading Pte Ltd - Singapore
- Semirara Mining and Power Corporation, Philippines
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- European Bulk Services B.V. - Netherlands
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- PetroVietnam Power Coal Import and Supply Company
- Essar Steel Hazira Ltd - India
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- McConnell Dowell - Australia
- Global Coal Blending Company Limited - Australia
- Thai Mozambique Logistica
- PTC India Limited - India
- Minerals Council of Australia
- Borneo Indobara - Indonesia
- Parliament of New Zealand
- Independent Power Producers Association of India
- Bhoruka Overseas - Indonesia
- Sojitz Corporation - Japan
- Gujarat Electricity Regulatory Commission - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Deloitte Consulting - India
- Salva Resources Pvt Ltd - India
- Parry Sugars Refinery, India
- Manunggal Multi Energi - Indonesia
- Orica Mining Services - Indonesia
- Posco Energy - South Korea
- Aditya Birla Group - India
- Star Paper Mills Limited - India
- Singapore Mercantile Exchange
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- Mintek Dendrill Indonesia
- Indonesian Coal Mining Association
- Central Electricity Authority - India
- Meralco Power Generation, Philippines
- London Commodity Brokers - England
- Asmin Koalindo Tuhup - Indonesia
- Renaissance Capital - South Africa
- GMR Energy Limited - India
- Carbofer General Trading SA - India
- Kaltim Prima Coal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- White Energy Company Limited
- Oldendorff Carriers - Singapore
- Attock Cement Pakistan Limited
- Aboitiz Power Corporation - Philippines
- Standard Chartered Bank - UAE
- Cigading International Bulk Terminal - Indonesia
- San Jose City I Power Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- Mercuria Energy - Indonesia
- Larsen & Toubro Limited - India
- Savvy Resources Ltd - HongKong
- India Bulls Power Limited - India
- Indian Energy Exchange, India
- Videocon Industries ltd - India
- Billiton Holdings Pty Ltd - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Georgia Ports Authority, United States
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- Karaikal Port Pvt Ltd - India
- GVK Power & Infra Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Merrill Lynch Commodities Europe
- Global Business Power Corporation, Philippines
- Africa Commodities Group - South Africa
- Power Finance Corporation Ltd., India
- Chettinad Cement Corporation Ltd - India
- Energy Development Corp, Philippines
- Bharathi Cement Corporation - India
- Electricity Authority, New Zealand
- Bayan Resources Tbk. - Indonesia
- Siam City Cement - Thailand
- Marubeni Corporation - India
- Leighton Contractors Pty Ltd - Australia
- Kideco Jaya Agung - Indonesia
- Bhatia International Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Straits Asia Resources Limited - Singapore
- Neyveli Lignite Corporation Ltd, - India
- The State Trading Corporation of India Ltd
- Indian Oil Corporation Limited
- Antam Resourcindo - Indonesia
- Bukit Makmur.PT - Indonesia
- Siam City Cement PLC, Thailand
- AsiaOL BioFuels Corp., Philippines
- Tamil Nadu electricity Board
- Baramulti Group, Indonesia
- The University of Queensland
- Economic Council, Georgia
- Coalindo Energy - Indonesia
- Tata Chemicals Ltd - India
- Sree Jayajothi Cements Limited - India
- Alfred C Toepfer International GmbH - Germany
- OPG Power Generation Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Kumho Petrochemical, South Korea
- Latin American Coal - Colombia
- CIMB Investment Bank - Malaysia
- Sarangani Energy Corporation, Philippines
- IEA Clean Coal Centre - UK
- PowerSource Philippines DevCo
- Sinarmas Energy and Mining - Indonesia
- Indika Energy - Indonesia
- Eastern Energy - Thailand
- Romanian Commodities Exchange
- ASAPP Information Group - India
- Ministry of Finance - Indonesia
- Agrawal Coal Company - India
- Sical Logistics Limited - India
- Makarim & Taira - Indonesia
- SMG Consultants - Indonesia
- Energy Link Ltd, New Zealand
- Uttam Galva Steels Limited - India
- Toyota Tsusho Corporation, Japan
- Binh Thuan Hamico - Vietnam
- Pendopo Energi Batubara - Indonesia
- Ind-Barath Power Infra Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Global Green Power PLC Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Metalloyd Limited - United Kingdom
- Thiess Contractors Indonesia
- Barasentosa Lestari - Indonesia
- Samtan Co., Ltd - South Korea
- Madhucon Powers Ltd - India
- IHS Mccloskey Coal Group - USA
- Eastern Coal Council - USA
- Banpu Public Company Limited - Thailand
- Karbindo Abesyapradhi - Indoneisa
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